Smith & Nephew cuts cord on gynaecology unit to fund USD300m buyback

Smith & Nephew has agreed to sell its gynaecology business for $350m to New York-based Medtronic, of which $300m will be returned to shareholder via a share buyback.

The London- and New York-listed medical technology business said the proceeds were surplus to its current capital requirements and that, after the buyback, it expected the deal to be broadly neutral to adjusted earnings in 2017 and to reduce EPS by less than 1 cent in 2016.

Gynaecology delivered revenue of $56m in 2015, representing a little over 1% of group revenue, and the unit attracted strong interest from potential buyers.

This allowed S&N to obtain "an attractive valuation", said chief executive officer Olivier Bohuon.

“Smith & Nephew’s management team has a strong track record of creating value through organic growth and by acquisition," he added. "The sale of our gynaecology business demonstrates our disciplined strategic approach to capital deployment and to crystallising value through divestiture at the right time."

The gynaecology arm was built around the company's resection technologies, primarily comprised of the TruClear System for the hysteroscopic resection and removal of uterine polyps and fibroids.

SN shares were down 1.2% to 1,137p by mid afternoon on Wednesday.